Morgan Stanley Smith Barney Offers 'Social' Advisers

The 2009 merger between Morgan Stanley and Smith Barney would have been challenging in the best of times; between the two companies, more than 17,000 financial advisers had to be brought under one roof, complete with a technology overhaul for both firms.

But with the financial crisis in full swing, the newly combined group faced an additional challenge: a bust-induced climate of mistrust surrounding financial advisers, coupled with a rising tide of financial advice coming from a growing number of sources and technologies, including blogs, Twitter, and LinkedIn.

Morgan Stanley Smith Barney (MSSB) advisers, viewing this flood of content as a competitive threat to their own financial advice, sought guidance to navigate the emerging social-media landscape. "Wealth managers who have not taken the initial steps in developing social-media strategy run the risk of losing their relevance in a world where the most thoroughly vetted and sophisticated advice can drown in a sea of peer-generated content," says Isabella Fonseca, research director of Celent Communications, a Boston-based consultancy that produces research on the financial services industry.

In June 2011, MSSB launched Advisor Insights, which it claims is the first internal social networking site for financial advisers from a major wealth management firm. It works like an internal version of LinkedIn: Financial advisers with deep experience in a specific area post their profiles, follow peers, and pair up with other advisers within the company who are in need of their unique expertise.

The firm's social media initiatives, which also include engaging customers through channels like LinkedIn and Twitter, earned it a spot on U.S. News's Most Connected Companies list.

"Our social media initiative enables our financial advisers to engage with clients in the channels they already use in their personal lives," says Christine Pollak, executive director of communications at MSSB. "Their online presence is becoming more important as online search and social networking has become so widespread."

Morgan Stanley Smith Barney is also wading into the fray where free-for-all social media meets complex financial regulation, which are not easily implemented, amended, or repealed.

The use of social media by financial advisers is in its early stages. Smaller firms have been the most aggressive in using social-media platforms to reach customers, while larger firms have generally held back. Meanwhile, regulation is still evolving. The Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) want advisers participating in social media sites to keep and store detailed records of their communications (up to five years for advisers participating in social media sites, with three years in a readily available format), and content posted on social media to be vetted by regulators and internal compliance departments. Firms must also be careful about distinguishing what constitutes a recommendation and what constitutes research.

Twitter interfaces are also a challenge for the firm. Since traditional Wall Street research and disclosures go way beyond Twitter's allotted 140 characters, the firm's solution has been to provide company-approved tweets. For example, if the market jumps 150 points, the company sends out a tweet or posts a LinkedIn status update called the "150 Point Letter" analyzing the move.

"Our social media program allows [financial advisers] to use LinkedIn and Twitter in a compliant way," says Pollak. "They can have a robust LinkedIn profile that discusses their practice and specialties, broadening their online presence and allowing them to leverage the networking and thought leadership capabilities the site offers. It allows [advisers] to find mutual connections with customers--essentially making every prospecting call a warm call instead of a cold call."

In giving advisers new communication tools, MSSB is careful to follow regulations. The firm tracks and captures communication of its brokers and retains it for regulators. "Among the larger firms, Morgan Stanley has been a pioneer in that it allowed a huge pool of brokers to start using social networking first, although in a restricted manner," says Celent Communications analyst Sreekrishna Sankar.

Integrating MSSB meant more than merging two communication systems; decisions about the new company's public face also had to take into account the latest technology. In the past, the Global Investment Committee's "On the Markets" commentary was delivered via the Morgan Stanley website and email. The firm recently launched an iPad-only app that gives clients interactive access to the report.

"The iPad was chosen as the delivery channel because the screen size was perfect for commentary, charts, and videos," Pollak says. "Over half of our financial advisers already owned an iPad. In addition to On the Markets, we have deployed 3D Mobile, a mobile version of the Financial Advisors desktop, allowing them to access client information such as balances, positions, and activity. We are currently in development to deliver a mobile tool to allow [financial advisers] to conduct presentations with clients using the iPad."